Preapproval went through underwriting . . . what is next?

[Anonymous]

Our documents were sent to underwriting for preapproval (tax returns, bank statements, verification of rent receipts, pay stubs, letters of explanation, etc.).  I had all of that done because of my reading on here and knowing that our scores were over 620 but less than 680.   So I sent it all the loan officer.   Got notification this weekend, after a few days wait, that we were pre-approved and can move forward (but we are waiting on seller's bank to approve our short sale offer).  Typically, if we had the seller's bank approval, what would be next?  I know appraisal and inspections.  But as far as approval or credit, what else will they look at other than to see that the appraisal supports the offer price?  I mean, if you have preapproval, what else is really left?  

[Anonymous]

Pre-approval is really just based off of:

- credit scores

- verbal confirmaiton of your downpayment %a mount

- recent paystub

- rough calculation of DTi

Underwriting is a different animal.  it isnt there to verify you are a candidate for a loan it is there is there to calculate the banks risk for something that has an actual offer accepted.  Underwriting will go much deeper into:

-have you applied for new credit since you were pre approved.  if yes they will ask you to explain and sign a form with your explination.  Even something like the mortgage companies hard pull of your credit report may need to be explained.  they dont want you seeking new credit while your about to borrow 6 figures

-an actuall confirmation of employment.  they will call your employer and fax/email them a form to sign to verify status and salary

-a deep dive into your financials.  not just your credit.  if large sums of money show up, they will want explinations (was this a gift?  a loan?)  if you had overdrafted accounts on multiple occasions they may want to know why.  is this a cashflow issue or an anomolie oversight/incorrect charge?  

-settlements,  etc.  if you have a lawsuit or settlement outstanding or in progress they may ask about it.  they dont want to give you 6 figures in loan if you are being sued for a ton of money and may lose.

-the appraisail is important.  if the house appraises for less then you are purchasing/borrowing thats a big risk issue.  for example if you buy the house for 300K and borrow 285k and the house appraises for 280k the bank now has 5k of risk.  they may ask you to pay the difference or increase your PMI.

For the most part, unless you have some shady stuff going on or are applying for other credit most of it will just require an explination and maybe cost you some money to clear up prior to a commitment letter.  

good luck!